Protect Nonprofit Nonpartisanship
A powerful few in the White House and Congress – and the special interests influencing them – are trying to politicize and polarize the 501(c)(3) community for their own purposes. Nonpartisanship is vital to the success and wellbeing of our communities. In the opinion of most charitable nonprofits and foundations, it is vital that we preserve the law – known as the Johnson Amendment – that
protects 501(c)(3) nonprofits and foundations from demands by politicians and their operatives for political endorsements and campaign contributions. Join more than 4,700 organizations – charitable nonprofits, religious institutions, foundations, and for-profits from across the country – by signing the Community Letter in Support of Nonpartisanship.
Who has signed the Community Letter so far? Here is a representative sample from all 50 states:
- Private Foundations: Annie E. Casey Foundation, Ford Foundation, Hewlett Foundation, Charles Stewart Mott Foundation, Rockefeller Brothers Fund, Weingart Foundation
- Charitable Nonprofits: Americans for the Arts, Feeding America, Habitat for Humanity (145+ state and local affiliates), National Council of Churches, United Ways (80+ state and local affiliates), YWCA (45+ local affiliates)
- For-Profit Businesses: Council Services Plus, Dietel Partners, Morino Ventures LLC, NEO Law Group, Smith’s Food & Drug
Sign the Community Letter today and show that we collectively intend to resist any and all efforts to politicize our sector through legislation weakening or repealing the longstanding protection in federal tax law that keeps 501(c)(3) organizations away from endorsing, opposing, or contributing to candidates for public office.
Budget, Spending Process for FY 2018 Begins
On May 23, the White House made the first full move in the multi-step annual federal budget process by releasing a $4.1 trillion budget blueprint for Fiscal Year 2018 that begins on October 1. Every President’s budget is essentially a wish-list of spending and policy priorities sent to Congress for the remaining steps – approval of a budget resolution that sets spending levels, passage of 12 appropriations bills, and enactment of a budget reconciliation bill that can address hard-to-pass measures such as health care reform and a comprehensive tax overhaul. As announced in the President’s “skinny
budget” released in March, the proposal calls for increasing defense spending next year by $54 billion and “paying for it” by taking $54 billion away from many domestic programs. The budget proposes to eliminate 66 programs, including the Corporation for National and Community Service, National Endowments for Arts and for the Humanities, and several block grants. It also proposes major policy changes, such as turning Medicaid payments to the states into block grant programs and cutting $193 billion from the Supplemental Nutrition Assistance Program by phasing in a requirement that states match federal funding for the program.
For more information, please read the analysis by the National Council of Nonprofits, the numerous resources in the sidebar (right), and the article on Advocacy Lessons Learned (below).
- Sanctuary Jurisdiction E.O. Update: The Trump Administration is backing off the range of sanctions it will impose on cities and counties that refuse to cooperate with immigration enforcement efforts. A federal judge issued a nationwide injunction last month blocking implementation of an Executive Order signed in January instructing federal departments to withhold all federal funds to jurisdictions that do not follow the Administration's directives to detain
immigrants to be deported from the United States. Now the Administration has narrowed the definition of “sanctuary city” and limited the potential financial consequences to only a loss of three grant programs from the Justice Department and the Department of Homeland Security, not all federal funds. However, the Administration proposes imposing new sanctions in its budget request to Congress.
- DOE Grant Monitoring Criticized: The U.S. Department of Education failed to meet protocols and maintain proper records concerning grants to schools, districts, states, and nonprofits, according to a recent report by the Government Accountability Office. The report found a pool of 75 discretionary grants from 2015, worth $272 million combined, were not adequately monitored by the Department. Grants are often distributed over multiple years and require documentation proving
“substantial progress” towards their goals to continue receiving funding. The sample indicated that 69 out of the 75 analyzed grants had missing documentation of performance. The Secretary of Education found the report “unacceptable,” and a Member of Congress is calling on the Secretary to make “serious improvements.”
Government-Nonprofit Contracting Reform Update
OMB Delays Procurement Requirements
Although needed revisions to the Uniform Guidance expected since last fall are still on hold due to the change in administrations, there is news on a mandate in the federal grants rules regarding procurement procedures. In mid-May, the Office of Management and Budget published notice of an additional grace period for implementing the procurement requirements established in the Uniform Guidance. Nonprofits may delay implementation of the new regulations until the beginning of their fiscal year that starts after December 26, 2017.
Another delay may not be provided, so it is not too early to be establishing or reviewing internal procurement policies and procedures to ensure compliance with the upcoming changes.
Protecting the Arts and Preserving the Future
Despite decades of growing bi-partisan support in Congress for the National Endowment for the Arts (NEA), President Trump’s budget blueprint for Fiscal Year 2018 proposes to eliminate the independent agency. The President announced plans to cut NEA funding in his “skinny budget” released in March, but Congress just this month voted to increase funding by $2 million each for the NEA and the National Endowment for the Humanities for Fiscal Year 2017. Advocates are fighting for another increase for next year, pointing out that NEA funds support unique learning opportunities for children and adults, expand public access to the arts, and nurture the creative capacity of communities large and small. Forty percent of the NEA’s grantmaking budget is awarded directly to the states through their state and regional arts agencies, reaching every Congressional district in the country. Sixty percent of funds go directly to organizations and
individuals, the majority of which go to small- and medium-sized organizations via grants. Advocates point out that the ripple effects are significant as federal funding attracts other forms of support that expand access to the arts in communities nationwide. Ultimately, while the NEA’s $147.9 million appropriation for fiscal year 2016 only accounted for .004 percent of the federal budget, each dollar leverages up to $9 in private and other public funds, resulting in $500 million in matching support. For more information, contact the League of American Orchestras.
State Reliance on Federal Funds
The specter of significant cuts to federal funding for the states brings to the forefront data from the updated 2015 Annual Survey of State Government Finances from the Census Bureau, which delves into how much each state relies on federal aid across major spending areas. On average, states receive nearly one-third of their funding from the federal government. These federal funds are most often used for costs in Medicaid and other social assistance programs, which are the single largest line items in states’ budgets. Key
findings show that federal intergovernmental revenues comprise 42 percent of the general fund revenues of Louisiana and Mississippi, and federal funding for education-related programs make up 20 percent of the Wyoming budget. Public welfare, specifically costs associated with Medicaid, is the single largest source of federal funding. New Mexico and Ohio rely on federal funds for over 90 percent of their public welfare general expenditures.
Taxes, Fees, PILOTs
North Carolina May Review Tax Exemptions
A new bill in North Carolina seeks to create two studies on nonprofit property tax exemption. One would investigate whether existing property tax exemptions, including those that apply to nonprofits, are serving their intended purposes. The other would be tasked with examining the amount of charity care provided by nonprofits that are exempt from paying property tax and investigating the impact, if any, that occurs when tax-exempt nonprofits purchase and use property that was previously taxable.
New York Revitalization Act Amendments Go into Effect
New amendments to the Nonprofit Revitalization Act are now taking effect, further refining the New York Not-for-Profit Corporation Law. The revisions were enacted to eliminate minor issues of noncompliance due to certain aspects of the Act being “operationally impractical” or posing challenges not serving the purposes of the law. Significant areas impacted are committee formation and operational
provisions, conflict of interest and whistleblower provisions, definitions of independent director and key person, employees as board chair, and related party transaction provisions. The Nonprofit Coordinating Committee of New York and the New York Council of Nonprofits provide updated resources.
Everything is Bigger in Texas – Even the Fight Over Disclosure Requirements
There was drama in Texas this month as Senators sought to turn non-controversial disclosure legislation into an intrusive, burdensome regime targeting nonprofits. A House-passed bill would require a "governmental body" receiving a public records request to expedite responses to requests for public information. The Senate attempted to amend that bill to insert the text of Senate legislation designed to extend public records laws to nonprofits with government grants and contracts. Specifically, the
Senate measure would expand the definition of governmental body for the purposes of public information to include (1) a nonprofit that receives public funds or other public resources for purposes other than a specific and definite obligation to provide a measurable amount of service in exchange for the funds, (2) receives public funds under a contract that indicates a common purpose or creates an agency-type relationship with a public entity, or (3) provides services traditionally provided by a government body. So far, the parliamentarian rejected the addition of the Senate language onto the other bill. As in Oregon and Washington State earlier this year, nonprofits regularly face efforts by public-sector unions, legislators, and interest groups to impose governmental burdens on independent charitable organizations. Typically, these measures do not extend public records laws to for-profit businesses that perform work for the government, such as road builders, banks, or private security companies.
Advocacy Lessons Learned
Don’t Panic, Do Something Meaningful
The White House released a stark budget blueprint that proposes the elimination of 66 programs, many of which support the work of nonprofits in communities. If enacted by Congress, the fiscal year 2018 budget proposal would also set in motion a series of targeted and arbitrary
spending cuts affecting thousands of policy decisions by state and local governments, which themselves rely on the work of charitable nonprofits, and dramatically alter the relationship citizens have with their government.
The key to all of this, of course, is the phrase, “if enacted by Congress.” Senator Mike Enzi (R-WY), the Chairman of the Senate Budget Committee, said it best when he observed: “I hope that people don’t panic over the president’s — any president’s — budget. They’re just suggestions.” He was stating the constitutional and practical reality that Congress makes the spending decisions.
But the President’s proposal is a blueprint for those decisions, one set of suggestions that many of his supporters look to for guidance. In this case, the White House budget plan is the hard edge of the debate, making all subsequent decisions look softer (perhaps “kinder and gentler”). Nonprofits performing work on behalf of governments won’t find solace in observations that “it could be worse,” and need to advocate in the spending debates as a way of advancing their missions. Any pundit in DC this season will say that “This is unacceptable” is not an effective advocacy message; more targeted and impact-focused messaging is needed. Here are some areas of concern and action worth
- Anti-Arbitrary: Everyone should be willing to denounce the use of the “two-penny plan” in the proposed budget – the across-the-board spending reductions to nondefense discretionary programs that imposes arbitrary cuts of two percent per year for 10 years (shrinking those programs by a fifth over a decade). The National Council of Nonprofits opposes arbitrary and across-the-board budget cuts at any level of government and has pledged to work to inform policymakers of the impact of budget proposals on communities. As we see it, arbitrary formulas for cuts are a lazy politician’s answer to
complicated math problems. It is incumbent upon those organizations working on the front lines to give voice to the people directly affected by auto-pilot gimmicks.
- Pro-Impact: When many programs are under attack or review, simply saying “no” by itself rarely garners the attention or respect needed to carry the day. If nonprofits believe proposed spending levels are inadequate or policy changes are detrimental – based on their personal and professional experience – then they need to tell the story, present the data, and tell the story again. Loudly and immediately.
- Non-Traditional Allies: Spending cuts don’t occur in a vacuum and it is always best to recognize “it’s not about you.” Looking around, it is almost easy to identify the many other groups that care, and that will be ready to coalesce in support of common goals. The news in March that the Administration hoped to do away with the National Endowment for the Arts led former Governor and presidential candidate Mike Huckabee to speak out against the plan. Proposed elimination of the Community Development Block Grant program doesn’t just target services provided by nonprofits; local governments are equally concerned about the proposed cuts. And private funders have a stake in the outcome of the spending debates: Tim Delaney of the National Council of Nonprofits explains persuasively that “the White House budget blueprint silently, yet effectively, targets private philanthropy as the fallback subsidy for government programs that would be downsized or eliminated.” Each of these interests, and many more, should be willing to engage on the merits with nonprofit advocates.
Although no time to panic, there is a great deal on the line for nonprofits … and governments, funders, and the people we all serve. Careful attention to the lessons learned from past advocacy challenges and successful campaigns should engender hope and confidence that the best interests of America can prevail.
Read more Advocacy in Action lessons, a regular feature of Nonprofit Advocacy Matters.